Senate panel okays fuel price increase, others

A Fresh increase in the pump price of petrol is among the contents of a bill that has been approved by the Senate Committee on Works. It was presented yesterday for enactment by the upper chamber.

The proposed law captioned “The National Road Fund Establishment Bill”, which is part of the 11 economic reform bills initiated by the Senate, has already been endorsed by the House of Representatives.

The import of the proposed fuel levy charge is that end-users, including motorists, will pay N5 tax on every litre of fuel bought at any fuel station. This will worsen the hardship most Nigerians currently face.

Among the nine sources for generating revenue for the planned National Roads Fund, according to the bill, are “fuel levy of five naira (N5) chargeable per litre on any volume of petrol and diesel products imported into Nigeria and on locally refined petroleum products, as well as axle load control charges.” Others are: “Toll fees (a percentage not exceeding 10% of any revenue paid as user charge per vehicle on any federal road designated as a toll road, this is not applicable to PPP roads); international vehicle transit charges; and inter-state mass transit user charge of 0.5% deductible from the fare paid by passengers to commercial mass transit operators on inter-state roads.”

The bill also recommends “roads fund surcharge of 0.5% chargeable on the assessed value of any vehicle imported at any time into Nigeria; lease, licence or other fees which shall be 10% of the revenue accruing from lease or licence or other fees pertaining to non-vehicular road usages along any federal road and collected by the federal roads agency.” Also on the list are grants and loans, and gifts of land, money or other property.

The bill further states that the National Roads Fund would be established with a high level of independence under the jurisdiction of the Federal Ministry of Finance which will only oversee the fund for policy direction. In its report to the Senate, the Kabiru Gaya-led Committee on Works, which processed the bill, said: “The National Roads Fund shall set aside an amount not exceeding 3% of the total monies accruing to it in the preceding year as Administrative Fund.

“The use of National Roads Fund is restricted to routine and periodic maintenance work on roads and theadministration of the road network, which includes research and development.“Road agencies that will receive disbursements from the National Roads Fund must be established by law as independent agencies with dedicated accounts.

“The National Roads Fund will be excluded from The Consolidated Revenue Fund and Treasury Single Account.”The 11 economic recovery bills from where the National Road Fund Bill originated was initiated by the National Assembly leadership to help take the country out of recession.

They are the Petroleum Industry Governance Bill; National Development Bank of Nigeria Bill; National Road Fund Bill; Federal Roads Authority Act (Amendment) Bill; and National Transport Commission (Establishment) Bill.

The bill was listed on the Order Paper of yesterday but could not be considered because of time constraint. Gaya (APC, Kano State) pleaded with the Senate to pass the bill to facilitate the nation’s economic recovery.

In their reactions, some stakeholders in the downstream of the oil and gas sector have called on the government to discontinue any plan that may lead to further increase in the prices of petroleum products.They specifically emphasised the need to harmonise multiple taxes in the downstream sector and reduce the price of petrol.

The President, Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Okoronkwo, said that the bill would not lead to petrol price increase. According to him, the price of petrol is determined by the prevailing crude oil price at the international market and the country’s foreign exchange policy.

He urged the government to hasten up the process of becoming self-sufficient in petroleum refining to make the product affordable irrespective of forces that may lead to increase in petrol.

“What NNPC has done is to benchmark petrol price at N145 and market forces could even bring down the price of petrol as the downstream sector is partially deregulated. The bill has just been approved and stakeholders still need to study it and deliberate on the impact on the economy,” he added.

The General Secretary, Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), Joseph Ogbebor, said any increase in the price of petroleum products would have negative impact on the economy.“Last year, we were at the National Assembly to see how the petrol price could be reduced. We even told them to ensure that the price of petrol remained at N145 per litre.

“We also called for a unified tax system to help reduce the price of petrol. There are several taxes to different agencies, a fact which has led to the increase in the price of petrol.”

The Director of the Centre for Petroleum, Energy Economics and Law at the University of Ibadan, Adeola Adenikinju asked government to privatise the refineries.

He identified government’s continuous interference in commercial aspects of the downstream sector as a major impediment to its growth.“I do not think government can wave any magic wand to make the refineries work at internationally acceptable capacity utilisation level.

My preference is that the refineries should be privatised and the private sector should be encouraged to take over both the risk and returns associated with the market economy,” he said.